The rising inflation has impacted 95 percent of UK SMEs, with post-pandemic staffing challenges taking a heavy toll.
In a study conducted for NatWest’s Mentor by OnePoll, the extent of current hardships and emerging concerns faced by the UK’s SMEs is all too clear.
Small and mid-sized UK enterprises are battling a harsh range of post-pandemic staffing challenges, and face external challenges on multiple fronts, mainly brought to the fore by inflationary pressures.
What are the four key areas of concern?
Firstly, the cost of living crisis is biting into budgets. Over half of SMEs have endured above-inflation running costs, as global crises hit commerce, while 95 percent report higher running costs as a result of increased cost of living.
Secondly, recruitment challenges continue to take a heavy toll. Wage negotiations and interview no-shows are the biggest recruitment challenges for SMEs. Almost a quarter have seen new hires leave shortly after joining.
Thirdly, staff attrition is fuelling talent concerns and wage inflation. The so-called ‘Great Resignation’ has cast its shadow over SMEs, with more than a quarter reporting they have been unable to replace lost staff and vacancies remain unfilled as a result. Millennials are confirmed as the age group most likely to have left jobs in SMEs, with 29 percent reporting this.
Lastly, juggling act continues with hybrid working, wellness and inclusivity vying for visibility. Around a third of decision-makers plan to scrap hybrid working within the coming six months. Diversity, equity and inclusion (DEI) is still not a priority for 28 percent of SMEs.
Regional inflationary hotspots in London
The poll also identified regional inflationary hotspots in London, East Anglia, and Yorkshire. In the capital, costs have jumped by up to 30% for a third of respondents.
The majority (79%) of East Anglian firms report costs surging above inflation, at a rate of 11-20 percent, while 64 percent of businesses in Yorkshire and the Humber say their costs have risen by 6-10 percent, suggesting SMEs here are slightly less affected by inflation than the national average.
Recruitment challenges
Recruitment challenges take a heavy toll, with 95 percent of SMEs having struggled to recruit staff in the last year. The most pressing problems reported were of an inflationary nature: almost one third (29%) of decision makers say that in the past year, wage negotiations have failed to meet candidate expectations.
Moreover, almost one in four SMEs (24%) struggle with further inflationary staffing pressures, where benefits packages are failing to meet candidates’ expectations.
Hybrid working: the challenges
While many firms continue to embrace a split between home and office working, the future is less certain for others.
A staggering 35 percent of SMEs feel team dynamics have improved thanks to hybrid working.
Even so, according to those polled, the future of hybrid working appears far from secure, with 32 percent planning to call time on the policy within three to six months according to the poll.
However, another 38 percent have no plans to ditch it.
Wellbeing
The poll gives a mixed view of wellbeing initiatives in SMEs.
A staggering 31 percent have no plans in place, whilst others are showing more imagination; 24 percent are introducing flexible working hours, 23 percent opt for free or supplemented private healthcare, and 21 percent are creating wellbeing champions.
Natalie Nelson, Technical Advice Lead of Mentor comments: “Our survey reveals that SMEs have a fight on their hands – not only to stay afloat as costs continue to rise, but also to keep hold of staff, adapt to society’s new work-life expectations, and to recruit new team members. Mentor has a suite of expert help and advice on hand to help business owners and managers navigate the everyday and unexpected HR challenges alike.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
- Amelia Brand
- Amelia Brand
- Amelia Brand
- Amelia Brand
